NZ-based outdoor wear clothing retailer, Kathmandu Holdings Limited (ASX/NZX: KMD) will pay shareholders a record dividend after boosting net profit 33% to $NZ50.5 million for the year to July 31.
The increase of $NZ12.5 million came on a 31% lift in earnings before interest and tax (EBIT) to $NZ74.6 million for the same period.
A final dividend of 11.0 NZ cents per share will be paid, boosting the full year payout 15.4% to a record 15.0 NZ cents per share.
Staff will be given a bonus of $NZ1,000.
Sales rose 11.7% to $NZ497.4 million, meaning the company saw a sharp improvement in profit margins during the year.
Kathmandu CEO, Chief Executive Xavier Simonet said in the statement:
“We were delighted to achieve record profits this year as we balanced sales growth with gross margin improvement. Sales growth was supported by the success of our key product groups, improved promotional execution, inspiring digital content, and an enhanced in-store customer experience.
“Top line growth combined with a focus on cost control, resulted in excellent profit growth,” he added.
During the year Kathmandu bought the US group, Obōz, a premium US-based outdoor footwear brand.
“The Obōz acquisition provides us with the opportunity to accelerate our international growth, and diversify our product mix, geography, and channels to market. Kathmandu and Obōz are well aligned in core principles of brand development, innovation, quality, customer service, and sustainability,” the CEO said in yesterday’s statement.
Sales grew by 9.6% in Australia, Kathmandu’s largest market. The company said first-half New Zealand sales were impacted by lower levels of clearance stock, however, this was more than offset by gross margin improvement, with New Zealand gross profit 2% above FY2017. Online sales now comprise 9.4% of Kathmandu sales.
Margins rose nicely with the company revealing that Gross margin increased 1.4% points from 62.0% in 2016-7 to 63.4% in 2017.18, “which sits above the long-term target range 61% to 63%. Increased full price sell-through and higher average selling prices contributed to the improvement,” directors commented.
“Operating expenses decreased by 0.7% as a percentage of sales compared to FY2017. They include $2.0m transaction costs for the Obōz acquisition, plus $2.0m for an exceptional bonus to Kathmandu employees who are not already on a bonus scheme,” according to directors.
Kathmandu shares rose 7% to $2.988 after being as high as $3.18.
